Germany's DAX was slightly lower following a 40 per cent slump in Volkswagen AG shares.

Shares in Japan ended the day up almost eight per cent, continuing a winning streak buoyed by a strengthening dollar against the yen and Tuesday's 11 per cent surge in stocks on Wall Street.

Wednesday's close saw the benchmark Nikkei index up 7.7 per cent after a zigzag day of trading, taking the index back above the psychologically important 8,000 points mark for the first time in a week.

Reports that the Bank of Japan will announce a rate cut later this week added to the buying mood among Japanese investors.

Japanese interest rates are already low by the rest of the world's standards at just 0.5 per cent.